How to develop an Innovator’s Mindset in the established Enterprise

True innovation — the journey of creating and distributing outstanding new-to-the-world customer value — is critical to the success of every modern business. In times of increasing disruptive threads, immensely decreasing company life spansand sped-up adoption rates, innovation activities have become a crucial precondition for survival. Simply put, if we don’t innovate, our business will become obsolete eventually.

»Innovation is not a business strategy — it’s a survival capability!«

And yet, a lot of companies are willing to innovate but are rarely able to practice it. They invest enormous amounts of time and effort, set up innovation labs, build up innovation teams or bring in Design Thinking methodologies, and still fail miserably to create and market anything meaningful that would make any difference. In fact, most established companies struggle with innovation activities, because their culture & mindsets, hierarchies, and processes are naturally built around the execution of the current, successful business model and are focused on exploitation, perfection, and protection of the status quo. This is why corporations rather hesitate to take risks, fear failure, and struggle outside their comfort zone.

In a corporate environment that values perfect execution over free exploration, every innovation activity becomes incredibly hard: how to challenge the status quo in an organisational structure that has been built to protect it? How to challenge authority in complex systems of hierarchies? How to try new things in an environment where failure is not accepted? How to move fast where processes determine pace? To free our minds from execution excellence, the following 7 core principles can help us to develop an Innovator’s Mindset in the established enterprise.

1) Initial ideas just serve the purpose of getting started.

One fundamental rule of innovation is not to fall in love with initial ideas. Like most ideas, they will be proven wrong anyways. We can be the smartest, kick-ass, creative geniuses with many years of experience, but in the end, it is very likely that our »brilliant ideas« will be proven wrong as soon as they face first customer contact. In the innovator’s world, everything is considered wrong until it is proven right. All initial ideas are just hypotheses based on assumptions that have to be tested, and most of these assumptions will be proven wrong.

»Every process works well in theory, until you add people to the mix.« — Ash Maurya

Yet, most people in organisations struggle with seeing their first ideas being destroyed. Hence, they set up research in a way that it simply confirms pre-existing ideas or they just set the successful execution of the initial idea as the desired outcome for the whole innovation effort. However, innovation is not about executing a first idea. First ideas are solutions to a problem we do not really understand yet. To avoid the »brilliant idea trap« we have to treat an initial idea just as a starting point, or motivation, to deep-dive into the journey of exploration.

2) Incremental improvement is not true innovation.

Optimising the status quo by improving quality and customer satisfaction is what all successful companies are very good at. This is why they tend to fall back into these optimising habits, when it comes to new innovation efforts, as it pretends to be safe and predictable in times of extreme uncertainty. As a result, companies start to confuse the process of incremental improvement in a well-known market with the creation of new growth in yet unknown, not existing markets. They optimise existing solutions for existing customers and wonder why the outcome does not meet their ambitious expectation of future growth.

Improvement alone will not help companies to stay relevant in the future. When innovative new product categories create new markets and substitute companies’ core businesses, getting better at things people want less will not help them to survive. Nokia could have improved their phones as long as they wanted, but it would not have kept them unscathed from the iPhone.

3) True innovation makes people switch from today’s solutions.

People usually do not care about the survival of a business or product. The only things they care about is to solve their problems and to make progress in their lives. Whenever a new and significantly better solution to a problem arises, people gradually consider switching to the better solution that gets their job done in a much easier, cheaper or faster way.

»Our customers are loyal to us right up until the second somebody offers them a better service.« — Jeff Bezos

This is why innovation is all about what people do and want, not what businesses want. Hence, modern product innovation activities are tailored to meet peoples’ needs by finding new opportunities to create outstanding new customer value that makes them switch from their current solutions. True innovation leads to growing customer adoption and, by that, a change in human behaviour.

As innovation is essentially about what people do and want, it requires a customer-centric approach. Observing competitors, on the other hand, does not serve as a good indicator for future growth. Competitive product releases are a »window into the past«. While Microsoft was busy copying the iPod, Apple created the iPhone and thereby substituted the iPod at once. To serve future customers’ needs much better than anyone else, we need to gain insights, study humans, and uncover motivations & unresolved problems.

»If we can keep competitors focused on us while we stay focused on customers, we’ll turn out all right.« — Jeff Bezos

However, customer insights alone do not lead to innovation. It is hard to create something truly new by asking customers their opinions about a future that does not exist yet. No customer would ever have asked Apple to create the iPod, even though it turned out they wanted it. Research results can not predict what is going to be successful. This is why it is the innovator’s job to proactively invent the future on customers’ behalf.

Successful corporate innovation requires to seek the right balance between what people really want, what new technology enables us to do, and what suits the organisation’s capabilities, identity, and mission: who are we and what are we good at? How can we leverage new technology? For which jobs will customers hire us in the future?

5) Innovation is open-minded, uncertain, and risky.

Every corporate culture that can not accept failure, nor handle risk loves the deceptive certainty of fixed goals, plans, and forecasts. However, innovation happens under conditions of extreme uncertainty and is unpredictable. If we already know exactly what to do, we are not innovating, we are just executing a plan. It makes no sense to set up fixed goals upfront or to analyse non-existing markets. It prevents innovators from discovering new opportunities: Christopher Columbus failed to find a shorter route to India, even though he discovered an entirely new continent. Opportunities typically emerge during research, which is why innovators value failing as progress and embrace unexpected findings. They do not get stuck in trying to predict a future they do not know yet — they simply create it.

Even though large organisations are often willing to innovate, it is common among employees not to like to take risks and to feel uncomfortable with uncertainty. However, innovation is a messy journey into the unknown, where taking risks and making fast decisions is essential for sufficient learning. If we are innovating, we are in the business of experimentation and risk-taking, uncertainty and failure, and, thus, need to act accordingly.

6) There is no one true path to innovation.

Successful companies tend to glorify internal processes that have been proven successful in the past. However, there is no one true path to future innovation even though people in organisations might act as if. They get stuck in a one-size-fits-all innovation process mentality, where the process itself dominates every innovation activity, although there is no standardised process that leads to success. We should not waste time and money on the perfect execution of a pre-defined process.

»There is nothing so useless as doing efficiently that which should not be done at all.« — Peter Drucker

7) Innovation hurts and acts destructively.

Innovation drives change. As the culture, hierarchies, and processes of most successful organisations are designed to protect the status quo at any cost, every kind of new innovation that might challenge the status quo is seen as a threat. Peers will rather fight to protect the status quo, than helping to explore new business opportunities. An environment where new perspectives and analyses are likely to be dismissed is not a good innovation environment. Innovators see change as an opportunity, not as a threat. Apple, for instance, disrupted its own iPod business in favour of the new iPhone.

»In most companies the future suffers at the expense of the present.« — Alexander Osterwalder

Conclusion

We are living in a disruptive era of rapid change, where businesses that are not able to innovate will become obsolete eventually. As innovation activities aim to drive future growth and to ensure survival, organisations need to embrace change. In established enterprises the execution-focused environment, the resistance to change, unrealistic expectations, and lack of internal support make innovation unlikely to take place. This is why we have to create and foster a mindset across the organisational structure where corporate innovation can happen to exist. The key issue in established enterprises today is not the willingness to innovate, but people not accustomed to free their minds from perfect execution.